Support, Advice and Experience within the Property Market

SUPPLY OF RENTAL STOCK NOSE-DIVES

From Robert Ulph on May 2, 2016

This week I thought I would share results from the latest Association of Residential Letting Agents (ARLA) monthly questionnaire. The Private Rental Sector report goes out to 231 ARLA member branches every month and it gives a real insight into what is happening in the residential letting market.

The results from the latest questionnaire in April report that, rather alarmingly, the supply of rental housing stock on letting agents’ books fell in March. This number was down to the lowest level since the start of last year when the records began, reveals ARLA.

In March 2015, the average number of properties managed per branch was 192, which is down 12 per cent this year with just 169 rental properties managed per branch – the lowest level since records began in January 2015.

I’m happy to report that Pennington bucked this country-wide trend in the number of property we took on, but nonetheless the report findings are a worrying national shift.

So why the fall in supply?

In March, two thirds (65 per cent) of ARLA agents predicted that more current and prospective buy to let landlords will walk away from the market following the April stamp duty changes, causing a decrease in the supply of rental properties.

David Cox managing director, Association of Residential Letting Agents (ARLA) said: “We don’t expect falling supply to stop here – the recent stamp duty changes are very likely to cause supply to decrease even further, as landlords withdraw from the market.

“Whilst landlords adjust to the increase in costs we can expect to see one of three outcomes prevailing in the buy to let market: landlords absorbing the cost and taking the hit; landlords withdrawing from the market causing supply to fall; or landlords regaining those costs through hiking rents. Next month we can start to assess the damage.”

Rent costs rose in March for a third of tenants (32 per cent), and three in five (61 per cent) ARLA members fear they will increase further as a result of the changes – a growing sentiment since last month, when 57 per cent of agents agreed on this.

“Not only do our agents predict that rent costs will increase further, but rental homes may also face a decline in quality over time, as landlords struggle to keep up with maintenance costs alongside the higher stamp duty charge.”

I will review these results over the next few months and look to do a follow up report on what is happening across the country and more importantly in the Ipswich area with stock levels and with rental prices and how landlords and tenants are dealing with any impact.

If you would like further information on this report and what it means to you, whether as a current or prospective buy to let landlord then please do get in contact with me and I’ll be happy to help.